A delegation of over 50 top executives from Uruguay recently traveled to Silicon Valley not just to reiterate their market’s capacity as an advanced service provider, but also to tout their IT sector’s knack for creating proprietary technology products that compete with the big guys. The multi-day excursion also hosted heads of several Uruguayan academic incubators, government staff, and other private individuals, which is indicative of Uruguay’s heavily fraternal tech sector.
“One of the main objectives was looking for 200 million dollars in risk capital. We record about US$250 million per year in software exports. If we want to realize the goal of one billion dollars per year in software exports annually by 2020 the sector needs about a US$200 million influx in risk capital over the next several years,” said Marcel Mordezki, a PhD and head of the technology business management program at the University ORT who attended the trip.
He was referring to a private study commissioned by Uruguay’s Chamber of Information Technology (CUTI), carried out by one of the Big Four. The sector would definitely like to attract more venture capital like the 10 million dollar investment by Sequoia in Scanntech, a Uruguayan company that “offers a complete SaaS solution that allows independent grocery stores to process transactions, run inventory management and sell financial services,” according to Sequoia’s website.
“The VCs [Venture Capitalists] are not quite up to speed on Uruguay; it is kind of a hidden gem. Of course you hear VCs saying they want into Brazil or China, etc. even though VC firms are not particularly adept at managing investments far from home. When a VC does invest in Uruguay the company definitely has an outward focus. One thing about Uruguay is that it is a lot easier to get things done there; you can be a big fish in a small pond,” said John Matthesen, an Uruguay evangelist.
Show UY the Money
Of course Uruguay does not expect all of that money to come from the US, but they may well get a substantial portion of it from Silicon Valley. Uruguay has built a reputation for not only being a great service provider (hosting the likes of Tata, PCS, Sabre, Salesforce, and others) with generous tax breaks on foreign revenue streams generated by IT companies, but also gained notoriety as a hotbed for diverse technology products produced locally that are sold all over Latin America and beyond.
“Uruguay is the third largest software exporter in Latin America behind Brazil and Argentina and we are a nation of about 3.5 million people. On a per capita basis we are first,” exclaimed Pablo Salomon, President of CUTI. “The countries main public university was the first in Latin America to offer computer science,” he added.
“Paypal, Apple, Cisco, and Microsoft all received specific proposals from our government related to R&D operations.”
The entrepreneurs, academics, and officials we talked to for this interview could all rattle off the various software verticals conquered by Uruguayan companies; banking, healthcare, insurance, ERP, workflow, business intelligence, artificial intelligence, and the list goes on.
“There is a saying in Chile that goes, ‘Any smart buyer of intelligence software has to know Uruguayan products,’ because they are of comparable quality and cost half the price of solutions sold by the big guys,” said Mordezki.
The maturity of Uruguayan companies was highlighted when Stefanini IT Solutions, one of Brazil’s largest IT and outsourcing players, bought a 60 percent stake (see article) in Top Systems, an Uruguayan company that specializes in banking, micro finance, and fraud protection software.
Looking for Alliances
Many from the delegation (listed here) of course went for the networking, internal among the delegates and external towards VCs and US companies – they need more avenues to access the US market.
“We went to reinforce our relationship with John [their US representative], visit past clients and potential clients. We wanted to be there in the flesh to help consolidate the gains we’ve made,” said Martín Alcalá Rubí, CEO and Business Manager of Tryo Labs, a Python and Django focused development house.
There is a unique itch Uruguayan CEOs have to gain greater access to the US market through strategic relationships with US firms, perhaps even more so than their peers in other South American countries as they have always had that focus due to a small domestic market.
“Because of our small size we are a good test market, which is not itself big enough for high growth. Since the beginning our tech sector has been focused on exporting, and mostly to the US,” mentioned Salomon.
And it appears the Uruguayan government was following suit during the trip to Silicon Valley as well.
“Paypal, Apple, Cisco, and Microsoft all received specific proposals from our government related to R&D operations,” said Mordezki.